Shares of Mothercare Plc (MTC.L) climbed around 9 percent in the morning trade on London Stock Exchange after the mother and baby retailer said its underlying pre-tax profit for fiscal year 2013 is in line with market expectations. Meanwhile, sales for the quarter and the full year were hurt mainly by UK store closure program, despite strong international sales.
In its trading update, the company said its total group sales decreased 4.8 percent from the last year for the 11 week fourth-quarter ended March 30. Worldwide network sales, however, grew 6.9 percent.
The results exclude Mothercare Australia Limited, in which Mothercare had a minority 23 percent stake. The business was placed into administration, and it has been decided to close the business after assessing various potential strategies. As a result all 74 stores in Australia and New Zealand will close in due course.
International retail sales, excluding Australia and New Zealand, climbed 15.5 percent, and sales in constant currencies grew 15.3 percent, despite the challenges of the Eurozone.
In the UK, total sales fell 5.1 percent due to its store closure program, while like-for-like sales, or sales from stores that have been trading continuously from the same selling space for at least a year, were flat for the quarter, supported by a strong 18.2 percent increase in Direct in Home sales. The company noted that its UK store closures were ahead of plan, with 56 loss-making stores closed during the year.
For the 52 weeks period, group sales decreased 6 percent, mainly on a 9.2 percent drop in UK sales and 3.6 percent decline in UK like-for-like sales. International retail sales in the year grew 11.8 percent. In Russia, the company's largest market outside the UK, retail sales reached a new high, while in China retail sales were up 80 percent.
International business opened 115 stores during the year, and the company said it now operates 1,069 stores across 60 countries and remain encouraged by the growth opportunities across all regions.
Mothercare also said it continues to be focused on delivering cash margin.
Chief Executive Simon Calver said, "We are just 12 months into our three-year Transformation and Growth plan and while we still have much to do, our business is already on a firmer footing. …. So despite our continuing caution with regards to the outlook for consumer spending in the UK and the Eurozone, we can look ahead to the new year with confidence."
In London, Mothercare shares are currently trading at 318.25 pence, up 26.25 pence or 8.99 percent.
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